Energy bills for most British households are poised to rise again this spring, as an uptick in wholesale gas prices and escalating network charges put renewed financial pressure on millions of families.
Forecasts from Cornwall Insight, the energy consultancy, indicate that Ofgem’s price cap could nudge up by around 1 per cent to £1,762 a year for a typical dual-fuel household in April, reversing an earlier prediction of a modest decline. The new figure is slightly above the £1,738 cap that takes effect from January and continues the marked increase from pre-crisis averages of roughly £1,100 annually.
Other proposed adjustments to the price cap—such as allowances for energy-intensive industries—could add a further £20, bringing the total to £1,782 a year.
Europe’s gas prices have seen a volatile year. After dipping to €24 per megawatt-hour in February, they have surged back near a one-year high of €45.5 per MWh. Demand from Asia, driven higher by extreme summer temperatures, has intensified global competition for liquefied natural gas (LNG), on which Britain is increasingly reliant as it reduces its dependence on Russian pipeline supplies following the invasion of Ukraine.
Ofgem, the UK’s energy regulator, has warned that ongoing reliance on LNG imports is likely to keep gas markets volatile into next year. Craig Lowrey, principal consultant at Cornwall Insight, described the outlook for 2024 as “a perfect storm of regulatory changes and market turbulence,” adding that “while significant rises in price are currently unlikely, the degree of any increase will hinge on how the market and regulatory reforms evolve.”
The energy price cap, introduced in 2019, restricts the rate suppliers can charge per unit of gas and electricity. It is recalculated at regular intervals to reflect the costs of an efficient supplier. However, the result is that even at the current level, households face bills roughly 50 per cent higher than those seen before the energy crisis took hold.
Consumer advocates remain concerned. Simon Francis, co-ordinator of the End Fuel Poverty Coalition, noted: “The latest forecast suggests households will be paying about 70 per cent more than they were during the winter of 2020/21. That means an extra £750 per year, pushing more people into living in cold, damp homes and risking the health implications of fuel poverty.”
With gas prices elevated in the wake of geopolitical tensions, including the conflict in Ukraine, the Labour Party has proposed accelerating Britain’s shift toward renewables to reduce exposure to fossil fuel price spikes. According to research by think tank Ember, renewable sources are on track to provide more electricity to the UK grid than fossil fuels this year for the first time, offering a glimmer of long-term relief amid near-term cost pressures.
Jamie Young
Jamie is a seasoned business journalist and Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops to stay at the forefront of emerging trends.
When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs, sharing their wealth of knowledge to inspire the next generation of business leaders.
